Citigroup Fined $2 Million Over Facebook Disclosure

Massachusetts fined Citigroup(NYSE:C) $2 million after its top technology analyst and an unnamed junior analyst improperly disclosed non-public material information about Facebook(NASDAQ:FB) prior to its IPO.

Citigroup was an underwriter in the Facebook IPO and its analysts were prohibited from disseminating any non-public information prior to the offer.

The bank fired its top technology analyst Mark Mahaney for the breach on Friday, the Wall Street Journal reported.

Mahaney is unnamed in the complaint although thefilingdoes say the senior tech analyst was ranked as the No.1 Internet analyst at Institutional Investor Magazine for the last four years.

The junior analyst was fired in late September, according to the regulator's filing.

The regulator's investigation revealed that the junior analyst had exchanged non-public information about Facebook with two employees at blog Tech Crunch.

The analyst said he was ramping up coverage on Facebook and wanted feedback from the employees on his analysis. "This is of course confidential," he said in the email sent from his work address.

The information included proprietary work of Mahaney that was material and non-public, the complaint said.

When Tech Crunch employees wished to know if it can publish the information with attribution to an anonymous source, the analyst said, "My boss would eat me alive."

Mahaney, himself, was guilty of a breach of the firm's disclosure policy earlier, having shared his unpublished views aboutGoogle (NASDAQ:GOOG) and YouTube to a French reporter.

When a Citi employee alerted him to the fact in an email and said he had submitted a post-interview approval request, he replied, "This could get me in trouble. Shoot."

Ironically, Mahaney was previously with Galleon and was fired from that job for "not having enough edge," on stocks, according to an earlier WSJreport. Galleon's co-founder Raj Rajaratnam is serving a 11-year sentence in prison for insider trading.